It is five more months to 2019, the year of elections, and the government has now decided to exempt sanitary napkins from the ambit of Goods and Service Tax (GST).
Followed by the huge number of protests and campaigns happening over the year, the menstrual hygiene products were announced to be exempted from 12 per cent tax, at the GST council met in New Delhi, on Saturday.
While GST on sanitary pads was cut from 12 per cent to zero, other items of mass consumption including home appliances, footwear and rakhis were also exempted from the tax, Accordingly, the rate on refrigerators, water heaters, washing machines, televisions up to 68 centimetres, vacuum cleaners, batteries used in electric cars and mobile phones have been lowered from 28% to 18%.
The tax rate on ethanol, used in auto fuel blending has also been lowered from 12% to 5%. Besides the pruning of the 28% slab, tax rates have been reduced on a host of handicraft items.
The smart move to cut tax rates on items of mass consumption comes ahead of the next round of assembly elections in the states of Rajasthan, Madhya Pradesh and Chhattisgarh towards the end of the year and national polls in 2019.
Union Finance Minister Piyush Goyal announced massive rate cuts on a number of commodities under the Goods and Services Tax (GST), effective July 27— ANI Digital (@ani_digital) July 21, 2018
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Finance Minister Piyush Goyal said the focus of the Council was to simplify the tax regime, rationalise tax rates and give relief to small businesses, not merely revenue collection. The minister said that the revenue impact of rate cuts was marginal and better taxpayer compliance and improved consumption in the economy will more than offset the loss.
However, the new tax rates will be effective from July 27.
Addressing the seminar earlier this year, Goyal said, "The GST in the past one year has successfully worked and has generated ample revenue. This year there won't be a dearth of revenue if people continue to be a part of this system and pay their taxes. Just when people pay their taxes correctly, the government will be more empowered to reduce the rates even further, making the mechanism simpler."
In a major initiative to ease the tax system of the country, the Centre rolled out the GST on July 1, 2017. Under the GST regime, a regulated tax system was introduced in India.
A special meeting of GST council will also be held on August 4, 2018, in Delhi that will be focussed on MSMEs (Micro, Small and Medium Enterprises) sector.
Goyal also said that the GST council has cleared 46 amendments which will be passed in Parliament. "Besides revenue collection, the GST council will now focus on job creation as well," Goyal said.